The Central Bank of Nigeria (CBN) has reportedly faulted the claim by Zamfara State Governor and Chairman of the Nigeria Governors’ Forum (NGF), Abdulaziz Yari, that Nigeria is heading for another recession by mid-2020.
Governor Yari had earlier stated that Nigeria is sliding into another recession, adding that State Governors have unanimously agreed that borrowing is not a reliable alternative to solving the country’s economic problems.
However, the CBN Deputy Governor, Economic Policy, Dr. Joseph Nnanna, who represented CBN Governor Godwin Emefiele, dismissed the Governors’ claims at the public presentation of the Spring 2019 edition of Regional Economic Outlook (REO) by the International Monetary Fund (IMF) in Abuja.
Nnanna disclosed that Nigeria is making smooth progress towards growth and by end of 2019, all things being equal, Nigeria will likely have between 2.8 percent and three percent GDP (Gross Domestic Product) growth rate.
“since the third quarter of 2016, when we started coming out of recession, we have embarked on tight monetary policy in all its ramifications.”
No recession? Well, underemployment is worrisome: According to the apex bank’s Deputy Governor, Nigeria is not sliding into recession under the current CBN watch again However, he expressed fear over rising unemployment and underemployment rates in Nigeria.
“Right now, we are on the path of achieving our price stability goal of single-digit inflation. Are we going to witness increased inflation or are we sliding back into recession? My answer is no. But is that adequate? My answer is no. Three per cent GDP real growth rate is not enough for Nigeria where our population growth rate is 3.2 per cent. Per capita growth rate is still negative but definitely, we are not going through the era of 2016 when we had a recession. That won’t happen – hopefully. Not under CBN watch.”
Nnanna stressed that unemployment is not as severe as underemployment. Yet, he expressed concern that engagements of many Nigerians show they are performing below capacity.
“Majority of Nigerians are employed one way or another, but they are functioning below capacity. They are engaged in the informal sector, which is not performing optimally.”
About $109.1 billion transactions recorded in FX market since 2017: According to Nnanna, Since the Nigeria’s I & E forex window market was introduced in mid-2017, a total of $109.1 billion worth of transactions have been carried out in the market.
“The inflows through the CBN, as at today, is $16.5 billion while outflows amount to slightly under $10 billion.” Nigeria’s I&E forex window is a market for willing seller and willing buyer. CBN will not intervene in that market to fix prices.”
Nigeria is safe for investors: The apex bank’s Deputy Governor used the opportunity to assure existing and prospective portfolio and foreign direct investors that they will not encounter problems repatriating either their profits or capital.
“For the money market, our promise to external investors, be they portfolio investors or foreign direct investors, is that we are going to continue to maintain positive relationship. And the yield in Nigeria is comparative, if not more superior to the yield in other emerging market economies. Those who want to invest in the last frontier markets, the place to be is here.”
Earlier, the Director, African Department at IMF, Mr. Abebe Selassie, had urged the Nigerian authorities to keep inflation down and also grow the non-oil revenue, if the economy must perform optimally. The IMF chief reportedly disclosed that its projected 2.1 percent growth for the Nigerian economy in 2019 doesn’t reflect the potentials of Nigeria.
Abebe advised that monetary policy needs to be calibrated with an eye on keeping inflation down and facilitating exchange rate.
“Nigeria needs to maximise its potentials and grow its non-oil revenue. Non-oil revenue is too small, about four per cent to GDP, thus it’s important for government to generate more resources to meet infrastructural deficit.”